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Category: Passive income

Passive income comes with a wide variety of benefits for anyone looking to save up a nest egg or alleviate financial stress. It provides a viable way to free up time. Unlike the majority of income sources, money is not generated simply as an exchange of an individual’s time. Salaries are often calculated based on an hourly rate. Hence, the best income sources generate the most money for least possible time input.

The tradeoff is that the majority of passive sources require an upfront investment of either money or time. Passive income should not be mistaken for a get-rich-quick scheme. It usually comes in the form of a modest stream of revenue that can add value when combined with active income.

Many people dream of earning money while sleeping or relaxing on a beach. Passive income makes it possible but one needs to pick the ideal revenue-generating project to maximize earnings. A good example is rental income from a residential or commercial property. However, the hardest part is setting up the income source and getting the money flowing.

Choosing the ideal source of income provides a sure-fire way to enjoy greater financial freedom. Once multiple streams of revenue are active, the momentum will keep the money flowing. Some income sources require regular maintenance and they are more stable when compared to just one job. Individuals exercise more control over sources of passive income.

One simply needs to decide how much time and effort or financial investment to put in. There is a choice of multiple income streams, which enable an individual to continue working when one source stops. The internet has expanded the number of viable income generating opportunities. To take advantage of the online income streams, an individual needs a computer with an internet connection, time, motivation and patience.

When done correctly, the income stream will free up time for other income generating ventures.

Value creation

Passive revenue is based on the creation of value, which takes considerable effort and time. It may require financial investment. However, it does necessitate perpetual effort, thus a fixed ratio does not apply. There are three basic types of value exchange: selling value, rental value and secondary value. Selling value is straightforward in that one has to offer a product or service in return for money. These can be designer jeans or private jet charter and heart surgery.

However, this approach does not match other income sources because the service or commodity cannot be resold. On the other hand, software or digital goods can be easily duplicated with minimal effort, time and cost. Therefore, they provide an ideal source of passive revenue.

Renting value entails the provision of a service or commodity like going to work or renting a property. The rented item usually avoids or minimizes value degradation. This applies to renting a residential or commercial property, which remains rentable even after a tenant has left. Usage by tenants does cause significant wear and tear but does not diminish the property’s rental value.

Secondary value, on the other hand, involves the creation of new form of value. To create passive income, one needs to advertise potential and proceed to rent or sell it to interested parties. Providing a free newspaper is one way to create secondary value in that it attracts the attention of thousands or millions of readers. This value can be rented to companies willing to grab the attention of readers through advertisements.

Viable passive income sources

Dividend-paying stocks — investing in the stock of profitable businesses allows investors to take a share of the company’s profits. The profits are disbursed in the form of dividends, typically for a pre-determined amount per share of ownership. Viable businesses attract investors because they have excellent financial health. This makes them a good option for long-term investment. The dividends become a source of passive revenue.

Renting out commercial or residential properties — investing in real property is a practical option that has been a staple investment for decades. There is always considerable demand for accommodation, office space and industrial space. Many building owners pay for the mortgage using rental income and earn a reasonable profit.

E-books — publishing e-books creates a passive income that keeps money flowing over long periods. Customers pay per download. Individuals can compose a book on a wide variety of topics.

Advertising — blogs, websites, online magazines and print-based newspapers can be used to earn advertisement revenue. A web platform or print-based newspaper that attracts thousands or millions of readers can create a good source of income. Advertising networks like Google Adsense allow publishers to display banners on websites. The revenue is paid per click.

Apps — skilled programmers and amateurs can create useful apps and publish them via the Google Play Store and Apple’s App Store. Amateurs can use app creator tools, but the final product may not match the applications created by experienced programmers.

Passive income ideas are really unlimited and they depend on your skills and your particular style for business.

Partners Mike and Joanna want to sell off their property in one of the most happening areas of Denver, Colorado. However, the couple are not willing to reveal their identity. They fear that it could lead to problems with negotiating the best deal for the property. Similarly, Michelle who owns large tracts of farm land just outside Springfield. She too wants to remain anonymous while wanting to sell the property. If you too are caught in such a position and wondering whether it is possible to remain anonymous with trying to transfer, build, rent, transfer or sell your property? The answer is a resounding “Yes”. The solution lies in what is known as the ‘Land Trust‘.

What is a Land Trust

The working mechanism of such a trust is quite simple to understand. It is actually a private legal contract, under which you, the owner of the property, would transfer the title of the property to a trustee. As the owner you will still continue to have all rights over the property. You could for example, sell the property. You could also transfer it to an heir. Alternately you could rent it. If you want you can also build something on it too. All this and no one would know that it is you who are doing it. Given the several benefits it offers, it is not surprising that land trusts are becoming popular by the day.

The example of Walt Disney World is a good case in point in how land trusts work. In the early 1960s, Walt Disney was eyeing vast tracts of land in the Florida swampland. However, the tycoon knew that if he were to go around knocking doors of property owners personally, that would automatically drive up property prices in the area, for people would want to make the most of the deal. After all it is not every day that a business tycoon comes home asking for property. This is when Walt Disney decided to purchase land through several unknown trusts.
There are several benefits of land trusts. Let us take a look at them one by one.

Privacy

As mentioned earlier, the very reason why someone uses a trust is to be anonymous. No one will know that you own a particular property. When your financial dealings or bank accounts are protected by privacy clauses, why should your real estate properties be made part of public records, is the argument put forward by those in favor of the trusts. The fact that privacy is protected additionally offers the land owner protection against entities such as creditors, taxmen or attorneys who may want to seize the land for various reasons.

Keeping price, a secret

Supposing you want to sell your property by using a land trust, you can always keep the deal a secret. No one will know how much you sold the property for. Conversely, if were to buy a property too, you can keep things to yourself. In fact, this kind of secrecy is what drives many people towards these trusts.

Advantage in case of Judgments

There could be instances when several people could be beneficiaries in a trust and a judgement has been passed against one of them. In such cases, the judgement passed will be only on the interest of the beneficiary and not lien on the property. What this means is that the other beneficiaries can continue to enjoy the full benefits of the trust without having to worry about the judgement.

Agriculture land benefit

There could be instances when farming families would want to pass on their agricultural properties to their next generation. However, they could be worried that the heirs could partition the property. They need not worry, for it is not possible for the heirs to partition the property, in the case of a trust.

Protection from ownership issues

There are times when people could go bankrupt or there could be situations arising when there could be legal issues arising affecting a beneficiary. Usually what happens in cases of real estate development is that a court would typically appoint an executor who would in turn oversee the continuation of the particular project. However, the entire process could drag on and lead to delays. This is not so in the case of a trust. For even if a beneficiary were to become bankrupt, it would in no way interfere with the trust’s working. In the case of multiple beneficiaries, the other beneficiaries can relax, as they know that the trust would be carrying on its business as usual.

Helps avoid unnecessary lawsuits

It is a well-known fact that lawyers are always on the lookout for filing cases against those who own prime pieces or vast tracts of property. With trusts though, they would never be able to find out who owns the property.